Justice Dept. Sues to Block $13 Billion Deal by UnitedHealth Group

WASHINGTON The Justice Department filed a lawsuit Thursday to block a $13 billion acquisition of a health technology company by a UnitedHealth Group subsidiary, the latest move by the Biden administration to curb corporate consolidation.

The agency argued that UnitedHealth’s deal to buy medical technology company Change Healthcare would provide UnitedHealth with sensitive data that it could use against its competitors in the insurance business. The lawsuit was filed in the U.S. District Court for the District of Columbia. New York and Minnesota also joined the lawsuit.

A spokesperson for Optum, a subsidiary of UnitedHealth, said in a statement that the Department of Justice’s “deeply misguided position is based on highly speculative theories that do not reflect the realities of the healthcare system” and added that the company would “defend our cause.” vigorously.” A Change Healthcare spokeswoman said the company is still “working on completing the merger as we meet our obligations under the merger agreement.”

The deal is the latest deal to meet resistance from the Biden administration, which has made pushing back against corporate consolidation a central part of its economic agenda. Last year, President Biden signed an executive order to encourage competition in various industries. He also appointed Lina Khan, a well-known critic of the tech giants, to head the Federal Trade Commission, and Jonathan Kanter, a lawyer who represented large companies, to head the Department of Justice’s antitrust division.

Since then, the FTC locked Lockheed martin from buying rocket propulsion maker and chip giant Nvidia from buying design firm Arm. Even before Mr. Kanter was confirmed, the Justice Department filed a lawsuit to block a merger between two large insurance brokers; purchase of Simon & Schuster by Penguin Random House; and a deal that would merge some of JetBlue’s operations with American Airlines.

“An integral part of this effort is to ensure that markets are truly competitive,” said William Baer, ​​who previously served as head of the Justice Department’s antitrust division.

Attorney General Merrick B. Garland said in a statement that the agency is “committed to fighting anti-competitive mergers, especially at the intersection of healthcare and data.”


February 24, 2022 7:13 pm ET

At the center of the Justice Department’s lawsuit is data Change Healthcare collects to help process insurance claims. The department argued that the deal would allow UnitedHealth to see the rules its competitors used to process claims and undermine them. The agency said UnitedHealth might also process patient data from other insurance companies to gain a competitive edge.
The lawsuit alleges that, according to UnitedHealth’s estimate, more than half of U.S. health insurance claims “pass-through (or touch)” the Change Healthcare system. It says the former UnitedHealth chief executive viewed the tech company’s data as the “basis” to justify the deal.
The lawsuit also alleged that UnitedHealth could deny Change Healthcare products that other insurers use to its competitors or keep some of its innovations for itself. The Justice Department added that the deal would give UnitedHealth a monopoly on the type of services it used to check insurance claims for errors and speed up processing.
The companies said the acquisition would improve efficiency in the industry. They also considered selling a portion of Change Healthcare that the Justice Department said would give UnitedHealth a new monopoly.
Legislators and regulators are increasingly worried that big businesses can use massive amounts of data to hurt their competitors. A congressional committee has been investigating whether Amazon uses data from third-party sellers that use its platform, for example, to develop competing products. Facebook’s critics also argue that the company’s years of storing user data make it difficult for a new service to challenge its dominance.
Ever since Mr. Kanter joined the Justice Department’s antitrust division, critics have said he shouldn’t be handling cases against companies whose competitors he represented in private practice. According to a financial disclosure form he filed last year, he once represented Cigna, a major insurance company that competes with UnitedHealth and telehealth provider Teladoc.
Mr. Kanter was not involved in the lawsuit against UnitedHealth, said a person familiar with the Justice Department case.
Reid Abelson made a report.

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